I’m 34 years old and lost my job last month — and now I found out I owe $8,500 for a medical bill that’s already gone to collections. My credit score is tanking and I don’t know what to do

While recent reforms offer some protections, medical debt remains one of the leading causes of financial hardship in the United States.

Know your rights: The No Surprises Act

If you’ve been hit with a surprise bill, it’s worth checking whether it violates the No Surprises Act, which took effect January 1, 2022.

This federal law protects patients from unexpected charges that result from receiving out-of-network care at in-network facilities.

For example, if you were unknowingly treated by an out-of-network doctor in an in-network hospital, the No Surprises Act prevents you from being billed beyond your deductible, coinsurance or copayments.

You also have the right to receive a “good faith estimate” for non-emergency care if you’re uninsured or self-paying. This estimate should outline the expected charges before treatment. If the final bill exceeds the estimate by more than $400, you can dispute the charges through a formal patient-provider resolution process.

How medical debt impacts your credit

The good news is that recent changes to credit reporting have softened the blow of medical debt. The three major credit bureaus — Experian, Equifax and TransUnion — no longer report unpaid medical collections under $500. Paid medical collection debt is also no longer included on credit reports.

That said, larger unpaid debts — like Alex’s $8,500 bill — can still appear and remain on your credit report for up to seven years, hurting your score and future borrowing ability.

However, you typically have a 365-day grace period after the bill is sent to collections before it appears on your credit report. This gives you time to fix billing errors, work out a payment plan or negotiate a reduced amount.

What to do if you can’t afford to pay

If you’re facing a large medical bill with no way to pay it off, consider these steps:

• Check for errors: Medical bills are often inaccurate. Request an itemized invoice and verify each charge with your insurer.
• Negotiate: Many providers will accept less than the full amount if you can pay a portion upfront. Ask if they offer discounts if you pay a certain amount in full.
• Set up a payment plan: Hospitals and clinics may allow monthly payments. However, take note of the interest or fees charged by the provider.
• Apply for financial assistance: Nonprofit hospitals offer charity care. You may also qualify for Medicaid, local government aid or help from religious or nonprofit groups.
• Hire a medical billing advocate: These professionals can dispute errors and negotiate on your behalf. They typically charge a fee or a percentage of what they save you.
• Avoid high-interest debt: Using credit cards or personal loans should be a last resort. If you must, look for a 0% APR offer and pay it off before interest kicks in.

Rebuilding your credit

If your score has already taken a hit, it’s not the end of the road. Focus on paying your other debts on time, keeping credit card balances low and checking your credit reports for mistakes. Once your medical collection is paid, it will be removed from your report.

Medical debt can feel overwhelming, but it doesn’t have to define your financial future. By knowing your rights and acting quickly, you can take back control and protect your credit moving forward.